Customer awareness @ sbi mutual fund project report mba marketing

CUSTOMER AWARENESS ABOUT SBI MUTUAL FUND

TABLE OF CONTENT

S.NO PARTICULAR PAGE
NO

1.
EXECUTIVE SUMMARY 03

2.
INTRODUCTION TO BANKING 06
INDUSTRIES

3.
HISTORY OF STATE BANK OF INDIA 07

4.
SBI LIFE INSURANCE 12
5.
INTRODUCTION TO MUTUAL FUND 25
6.
ANALYSIS AND FINDINGS 45
7.
FINDINGS 58

8.
SUGGESTIONS 59

9.
CONCLUSION 60

10.
REFERENCES 61

11.
ANNEXURE 62

BABASAB PATIL Page 1


EXECUTIVE SUMMARY

TITLE OF THE STUDY

“OVER ALL STUDY OF SBI LIFE INSURANCE AND CUSTOMER
AWARNESS LEVEL ABOUT SBI MUTUAL FUND
IN BELGAUM CITY”

INTRODUCTION

SUMMARY OF THE COMPANY
State Bank of India

INCLUDEPICTURE "http://upload.wikimedia.org/wikipedia/en/thumb/c/cc/SBI-logo.svg/50px-

SBI-logo.svg.png" * MERGEFORMATINET

Type Public (BSE, NSE: SBI) & (LSE: SBID)
Founded Calcutta, 1806 (as Bank of Calcutta)
Corporate Center,
Headquarters Madame Cama Road,
Mumbai 400 021 India
Key people Chairman OM PRAKASH BHATT

Banking
Industry Insurance
Capital Markets and allied industries

Products Loans, Credit Cards, Savings, Investment vehicles, SBI Life (Insurance) etc.

Revenue 38382.42 cror (2006 ,March )

Website www.statebankofindia.com



Topic of the study:
“Over all study of sbi life insurance and customer awareness about sbi mutual
fund in Belgaum city”
This project was conducted so as to understand the concept of Mutual Funds and
its usage as an investment avenue. The study also aims to find out the awareness of
mutual funds and its preference over other investments. The project was undertaken at
state bank of India Belgaum”

The objectives of the study include:
 To over all study about SBI life insurance and mutual fund
 To find out market potential for mutual funds.
 To find out the factors, which influence to investing in mutual funds.
 To find out attributes investors look for while buying mutual funds.

My fieldwork involved visiting the people who have invested in mutual funds and
who have not purchased mutual funds and also chartered accountants to know whether they
have invested in mutual funds or not and also the reasons for their investment / non-
investment.

Research Methodology:
For collecting data, I used Questionnaire and interaction with people. The
primary data was collected through interaction with the people I visited, and secondary data
was collected from books, magazines, websites etc..
Sample Frame: People who have invested in mutual funds and who have not invested in
Mutual funds.
Sample size : 100 respondents
Sample Unit :
1. Bank Employees
2. Udyambag entrepreneurs
3. Government employees
4. Stock Dealers in Belgaum city
5. Businessmen.
Sampling Method : Simple random sampling technique.



“Simple random sampling means every element is selected independently of
every other element and the sample is drawn by a random procedure from a
sampling frame.”

Tools used for the study:
 Graphical Representation
 SPSS Software
 Other related statistical technique like factor analysis etc

The difficulty faced during the fieldwork was not getting the appointments of the
respondents since they were very busy and some were non-cooperative. Moreover, time
limitation was there. The data analysis is done by using coding sheet, SPSS software,
statistical techniques etc.

INTRODUCTION TO BANKING INDUSTRIES

State Bank of India:



(SBI)) is the largest bank in India. If one measures by the number of branch
offices and employees, SBI is the largest bank in the world. Established in 1806 as bank
of Bengal, it is the oldest commercial bank in the Indian Subcontinent. SBI provides
various domestic, international and NRI products and services, through its vast network
in India and overseas. With an asset base of $126 billion and its reach, it is a regional
banking behemoth. The government nationalized the bank in 1955, with the Reserve bank
of India taking a 60% ownership stake. In recent years the bank has focused on two
priorities, 1), reducing its huge staff through Golden handshake schemes known as the
Voluntary Retirement Scheme, which saw many of its best and brightest defect to the
private sector, and 2), computerizing its operations.
State Bank of India (SBI) is India's largest commercial bank. SBI has a vast
domestic network of over 9000 branches (approximately 14% of all bank branches) and
commands one-fifth of deposits and loans of all scheduled commercial banks in India.
The State Bank Group includes a network of eight banking subsidiaries and several non-
banking subsidiaries offering merchant banking services, fund management, factoring
services, primary dealership in government secure credit cards and insurance.

THE EIGHT BANKING SUBSIDIARIES ARE:
1 -State Bank of Bikaner and Jaipur (SBBJ)
2 -State Bank of Hyderabad (SBH)
3 -State Bank of India (SBI)
4 -State Bank of Indore (SBIR)
5 -State Bank of Mysore (SBM)
6 -State Bank of Patiala (SBP)
7 -State Bank of Saurashtra (SBS)
8 -State Bank of Travancore (SBT)

HISTORY OF STATE BANK OF INDIA

EVOLUTION OF SBI



The origin of SBI goes back to the first decade of the nineteenth century with the
establishment of the bank of Calcutta in Calcutta on 2 June 1806. Three year later the
bank received its charter and was redesigned as the bank of Bengal (2 January 1809). A
unique institution, it was the first joint stock bank of British India sponsored by the
government of Bengal. The bank of Bombay (15th April 1840) and the bank of madras (I
July 1843) followed by bank of Bengal. These three banks remained at the apex of
modern banking in India till their amalgamation as the imperial bank of India on 27
January 1921.

Primarily Anglo-Indian creation, the three presidency banks came into existence either as
a result of the compulsion of imperial finance or by the felt needs of local European
commerce and were not imposed from outside in an arbitrary manner to modernize
India’s economy. Their evolution was, however

Shaped by ideas culled from similar developments in Europe and England and was
influenced by changes occurring in the structure of both the local trading environment
and those in the relation of the Indian economy to the economy of Europe and the global
economy frame works

Establishments

The establishment of bank of Bengal marked the advent of limited liability, joint stock
banking in India, so was the associated in banking viz the decision to allow the bank of
Bengal to issue notes, which would be accepted goes the payments of public revenues
within a restricted geographical area, this right of note issue was very valuable not only
for the bank of Bengal but also its two siblings, he banks of Bombay and madras, it
meant an accretion to the capital of the bank, a capital on which the proprietors did not
have to pay any interest . The concept of deposit banking was also an innovation because
the practice of accepting money for safe keeping (in some cases even investment on
behalf of the clients) by the indigenous bankers had not spread as a general habit in most
parts of India, but for long time. And especially up to the time. Each charter provided for
a share capital. Four fifth of which were privately subscribed and the rest owned by the



provincial govt the member of the broad director, which managed the affair each bank,
were mostly proprietary directors representing the large European managing agency
house of India. The rest were government nominees, invariably civil servant, one of
whom was elected as the president of the board.

INCLUDEPICTURE
"http://upload.wikimedia.org/wikipedia/en/8/84/Bank_of_Bengal.jpg" *

MERGEFORMATINET
Offices of the Bank of Bengal

PROFILE

Spreading its arms around the world, the SBI’s International Banking Group delivers
the full range of cross-border finance solutions through its four wings – the Domestic
division, the Foreign Offices division, the Foreign Department and the International
Services division.

The Domestic wing provides services like merchant banking, shipping finance and
project export finance. The Foreign Offices wing offers the entire range of international
trade and industrial finance products, while the Kolkatta-based Foreign Department
undertakes treasury and currency operations.

The International Services division renders specialized services like correspondent
banking, global link services and country and bank risk exposure monitoring. Being
India’s largest and most trusted commercial bank, the SBI offers you a network of
relationships unmatched in strength and span by any other Indian financial entity.



The bank has a network of 66 offices/branches in 29 countries spanning all time zones.
The SBI’s international presence is supplemented by a group of Overseas and NRI
branches in India and correspondent links with over 522 leading banks of the world.
SBI’s offshore joint ventures and subsidiaries enhance its global stature.

The bank has carved a niche for itself in Euroland with branches strategically located in
Paris, Frankfurt and Antwerp. Indian banks and corporates are able to avail single-
window Euro services from SBI Frankfurt.

These strengths are reinforced by a dedicated and highly skilled team of professionals
deployed by the bank in each specific segment.

Mission Statement:
“To retain the bank position as the premier Indian Financial Service Group, with world
class standard and significant Global Business committed to excellence in customer,
shareholder and employee satisfaction to play a leading role in the expanding and
diversifying financial service sector, while continuing emphasis on its development
banking role “

Vision statement:
 Premier Indian Financial Service Group with Global Perspective, world-class
 Standard of efficiency and professionalism and core institutional values.
 Retain its position in the country as a pioneer in development banking
 Maximize shareholders values through high sustained earning per share
 An institution with a culture of mutual care and commitment, a satisfying and
exciting work environment and continue learning opportunities.
Core values of the bank:
 Excellence in customer service
 Profit orientation
 Belonging and commitment to the bank
 Fairness in all dealing and relations
 Risk taking and innovation



 Team playing
 Learning and renewal
 Integrity
 Transference and discipline in policies and system

Objectives of SBI
“Improvement in profitable through better management of asset portfolio increased
employee productivity, enhanced support to country’s foreign trade as well as substantial
improvement in the system particularly in the area of training mechanization, customer
service, and internal house keeping etc. “

Comfortable capital position
SBI is adequately capitalized with a tier I capital adequacy ratio of 8.04% and a large
capital base of Rs 240.72 billion as at March 31, 2005. The bank has considerably
improved its net worth coverage for net NPAs to 4.4 times as at March 31, 2005 due to
lower slippages reflecting an improving asset quality, witnessed across the entire banking
sector. The capitalization levels of SBI are adequate to address the asset side risks and
support the business growth in the medium term.

Management strategies
In retail finance, the bank has leveraged its corporate relationships, pursued business
growth selectively, and has not competed based on interest rate. The bank has taken
initiatives like on-line tax returns filing and faster transfer of funds to protect its dominant
position in the government business. The bank also has a clear technology strategy that
will enable it to compete with the new generation private sector banks in customer
service and operational efficiency.

Asset quality to remain at average levels

The bank continues to have a high level of gross NPAs at 5.95% of gross advances as at
March 31, 2005, compared with 4.9% for all scheduled commercial banks (SCBs) taken
together. The bank is facing challenges to improve the quality of assets originated, as can



be seen in the consistently higher levels of slippages (additions to NPAs) at 2.71% in
2004-05.

Business description

SBI along with its associate banks offer a wide range of banking products and services
across its different client markets. The bank has entered the market of term lending to
corporate and infrastructure financing, traditionally the domain of the financial
institutions. It has increased its thrust in retail assets in the last two years, and has built a
strong market position in housing loans.

SBI, through its non-banking subsidiaries, offers a host of financial services, viz.,
merchant banking, fund management, factoring, primary dealership, broking, investment
banking and credit cards. SBI has commenced its life insurance business by setting up a
subsidiary, SBI Life Insurance Company Limited, which is a joint venture with Cardiff
S.A., one of the largest insurance companies in France. SBI currently holds 74% equity in
the joint venture.

Industry prospects :

To leverage benefits such as access to low cost resources and the facility to provide a
larger gamut of services, a number of finance companies such as Kotak Mahindra
Finance Limited and HDFC Limited have promoted banks. Simultaneously, yet another
emerging trend is that of foreign banks promoting NBFCs to benefit from regulatory
flexibility available to such entities in areas like absence of statutory liquidity ratio and
cash reserve ratio requirements, priority sector requirements, and corporate exposure
limits.

SBI LIFE INSURANCE:

Our Mission:
"To emerge as the leading company offering a comprehensive range of life
insurance and pension products at competitive prices, ensuring high standards of



customer satisfaction and world class operating efficiency, and become a model life
insurance company in India in the post liberalization period".
Our Values:

 Trustworthiness
 Ambition
 Innovation
 Dynamism
 Excellence

SBI Life Insurance is a joint venture between the State bank of India and Cardif
SA of France. SBI Life Insurance is registered with an authorized capital of Rs 1000
crore and a paid up capital of Rs 500 crores. SBI owns 74% of the total capital and Cardif
the remaining 26%. State Bank of India enjoys the largest banking franchise in India.
Along with its 7 Associate Banks, SBI Group has the unrivalled strength of over 14,500
branches across the country, arguably the largest in the world. Cardif is a wholly owned
subsidiary of BNP Paribas, which is the Euro Zone’s leading Bank. BNP Paribas is one
of the oldest foreign banks with a presence in India dating back to 1860. Cardif is ranked
2nd worldwide in creditor’s insurance offering protection to over 35 million
policyholders and net income in excess of Euro 1 billion. Cardif has also been a pioneer
in the art of selling insurance products through commercial banks in France and in 35
more countries.

SBI Life Insurance’s mission is to emerge as the leading company offering a
comprehensive range of Life Insurance and pension products at competitive prices,
ensuring high standards of customer service and world class operating efficiency. SBI
Life has a unique multi-distribution model encompassing Bancassurance, Agency and
Group Corporate. SBI Life extensively leverages the SBI Group as a platform for cross-
selling insurance products along with its numerous banking product packages such as
housing loans and personal loans. SBI’s access to over 100 million accounts across the
country provides a vibrant base for insurance penetration across every region and
economic strata in the country ensuring true financial inclusion.Agency Channel,



comprising of the most productive force of more than 25,000 Insurance Advisors, offers
door to door insurance solutions to customers.

Why SBI life:

Customer Satisfaction - many of our customers who have bought an insurance policy
with us have bought a second one Financially sound with over a 100 years of Banking
experience, when you trusted us with your money, why would you trust somebody else
with your protection needs.
Individual product:

Unit Linked Plans: It may be difficult to understand all your needs but as your preferred
life insurance company, SBI Life definitely understands all your financial & insurance
needs. Unit linked Plans are an attempt to meet all your financial & insurance needs
through a single non participating product. What’s more you get market linked returns
which in the long term has always proved to give better returns than traditional savings
products. We offer the following plans under this category.

 Horizon II
 Unit Plus II
 Unit Plus Child Plan
 Unit Plus Elite Plan

Pension Plans: Life expectancy is improving rapidly. People live longer. You cannot
work throughout your life. You will have to retire from work. In the post retirement
period you have lot of time for yourself. You would like to do things you have not done
while you were working. You need to have a comprehensive plan to meet our post
retirement financial needs ensuring complete peace of mind.

 Horizon II Pension
 Unit Plus II Pension
 Life Long Pension

Pure Protection Plans: There are times when everything seems to be perfect, but who can



predict future and there is always a place to make this world a better place for our loved
ones. To ensure that these uncertainties do not shatter the dreams you have for your
family, SBI life offers you.

 Shield
 Swadhan
 Keyman

Protection cum Savings (Endowment) Plans: SBI Life offers a variety of plans that gives
you the benefit of protection and the opportunity to save for various events like purchase
of new house, wedding, car etc. we assist your savings.

 Sudarshan
 Scholar II
 Setubandhan

Money Back Plans: As an individual your life is fueled by dreams. You experience
different special moments in life like wedding, birth of a child, child’s education or
purchasing a new home. You have to be financially prepared for these special moments.
What you need is easy liquidity at regular intervals with life insurance protection take
Care of these special moments.

Money Back

• Sanjeevan Supreme

HORIZON II

Introduction:

SBI Life’s HORIZON II is a unique, non participating Unit Linked Insurance
Plan in Indian Insurance Industry, where you need not to be a financial market expert.
This plan offers the flexibility of Unit Linked Plan along with Automatic Asset
Allocation which provides relatively higher returns on your money where as increasing



death benefits provides higher security to your family.

Key features:
 Twin benefit of insurance cover and market linked returns
 Hassle-free investment management of funds from inception to maturity
 Automatic Asset Allocation of funds
 Automatic rebalancing of funds at yearly intervals, free of cost
 Higher protection, to meet your family financial needs.
 Automatic cover continuance.
 Liquidity option after 3 years
 Facility to top up your investment kitty.
 Tax benefit as per section 80C and 10(10D) of income tax act.
 15 days free look period from the date on which you receive the policy document.

No. of Units Fund(x) =
Net Investment in
Fund(x)

NAV of Fund(x)

Benefits:

• Hassle Free Investment Management: You simply invest we will manage it for you.

• Maturity Benefits: At the end of the term you will get the fund value.

• Increasing Death Benefit: For all in forced policies , In case of death after completion of
age 7.

UNIT PLUS CHILD PLAN



Introduction:
Life begins afresh when you become a parent and when the child takes that first step
towards you, the moment is filled with cheer, enthusiasm never felt before. This moment
marks a new beginning in the child’s life and there’s no looking back after that. The child
keeps growing and so are his dreams, aspirations which always aim to reach horizon and
you want your child achieve his/her dreams. But at the same time as a proud parent you
also want to secure their future against rising cost of education and other necessities. We
at SBI LIFE understand you better and hence have developed UNIT PLUS CHILD
PLAN to suit you and your needs best. This Plan is meant for parents in the age group of
18-57 having a child between the age group of 0-15 years.

Key features:

 Market related returns to match increasing cost of education
 Peace of Mind by giving you triple benefits.
 Loyalty units to celebrate your child reaching 18 years.
 New Investment Fund (Equity Optimiser Fund) in addition to existing funds.
 Pay Premium for a limited period and reap benefits over a long time.
 Flexible plan which adapts to your changing needs as and when you want.

UNIT PLUS ELITE:
Introduction
You set the ball rolling and have been the catalyst for transformation of the society and
your decisions have generated maximum benefits both at personal as well as society
level. Young generation aspires to be you and they get inspiration to emulate you to
achieve success. Your leadership does not settle with the normal, it deserves privileged
facilities. A plan which provides Value for “Your” money Our Preferred Customer.

PENSION PRODUCT
HORIZON II PENSION
Horizon II Pension is the most simple unit linked pension plan; all you need to do is:



 Choose your retirement date, the plan option and the regular premium amount.
 Based on the plan option and the term opted, SBI Life will invest your money in
three different funds viz., Equity Pension Fund, Bond Pension Fund and Money
Market Pension Fund.
 The funds are invested keeping in mind the term opted for and your money is
invested in safer funds as your policy approaches maturity.

UNIT PLUS II PENSION

 Pure Pension
 Pension cum Life Cover

IN THIS POLICY, THE INVESTMENT RISK IN INVESTMENT PORTFOLIO IS
BORNE BY THE POLICYHOLDER

Introduction:

We at SBI Life understand the basic needs for pension plan and give you financial
strength to maintain your life style even after the retirement. Unit Plus II Pension plan
makes sure that you have regular income after you retire and also helps you to maintain
your standard of living. This is a unit linked pension plan wherein the policyholder
chooses an investment period from 5 to 52 years for a vesting age between 50 to 70 years.
You can choose to pay either single premium or pay regular premium for the entire
policy term. Your contributions are invested into 4 fund options as per your choice.

Key Features:

Choice to invest & control four different funds as per your risk appetite.

Flexibility to choose between two options



 Pure Pension
 Pension cum Life Cover
 No medical required for Pure Pension, automatic acceptance facility.
 Flexibility to increase regular contribution.
 Top up payments: any amount, anytime.
 Customize your plan by adding riders.
 15 days free look period.



LIFE LONG PENSION:
Introduction:
Life expectancy is improving rapidly. People live longer. You cannot work throughout
your life. You will have to retire from work. In the post retirement period you have lot of
time for yourself. You would like to do things you have not done while you were
working You need to have a comprehensive plan to meet your post retirement financial
needs ensuring complete peace of mind.

Key features:

 A maximum of Rs. 1,00,000 p.a. paid as a contribution on a pension plan is fully
deductible from the taxable income (within the max. ceiling Rs. 1 lakh )
 Minimum Guaranteed returns of 4% p.a. (compounded annually) on your
Personal Pension Account (till 31st March 2010) + Vested bonus.
 It helps you to accumulate enough savings to meet the old age needs and look for
a reliable and enduring pension payment.
 It is an extremely flexible plan.

Benefits:

 Tax benefit
 Maturity benefit
 Death benefit

Pure Protection Products:
Swadhan



Introduction
Happiness and security for your family is what you want. However life has its
uncertainties and risks. All that you’re interested in is how best to afford a secure future
for your loved one. Have you ever wished for a low premium insurance policy that not
only provides security to your loved ones but also returns back the premium paid.

 Protection at affordable premium

 e cover comes to you at no cost

 Tax benefit u/s 80 c and (10 D) of it act

 5% rebate for female lives
 Guaranteed return of basic premium paid on survival at the end of the term,
depending

Shield:
Introduction
Your family is of utmost importance to you. You want your family to have all the good
things in life and you would do everything you could to fulfill them. Life is full of
uncertainties and risk. To ensure that these uncertainties do not the shatter the dreams you
have for your family.
Key features:
 It offers you life insurance cover at the lowest cost for a selected term.
 It is available in 3 options to suit your requirement.
 Level Premium throughout the chosen term with increasing Sum Assured,
depending on the option chosen.
 Tax benefit u/s 80 C and 10 (10 D) of IT Act
 Attractive rebate for Female lives.

Schlor II
Introduction



As a caring parent you would always want your child to get the very best. Is there a way
to protect your children against life’s risks? Is there a way to make tomorrow safe for
them? Therefore this is the time when careful financial planning can help you fulfill the
aspirations that you have for your children’s. We at SBI Life can help you ensure that
your children’s future is secure and prosperous. Schlor II is designed to protect your
child’s future educational needs.

Key features
 We at SBI Life can help you ensure that your children’s future is secure and
prosperous. The uncertainties if life.

 We at SBI Life can help you ensure that your children’s future is secure and
prosperous. Installments.

 Attractive rider option

 15 days free lock period

Money back:
Introduction
As an individual your life is fueled by dreams. You experience different special moments
in life like wedding, birth of a child, child’s education or purchasing a new home. You
have to be financially prepared for these special moments. What you need is easy
liquidity at regular intervals with life insurance protection to take care of these special
moments.
Key features
 The plan has a number of money back options specially suited to your needs

 The cover is available at competitive premium rates.

 The cover is available at competitive premium rates.

 In addition to normal death cover, the plan also provides you 4 additional covers.
 Attractive rider options. Convenient premium payment options: Single and



Multiple premium payment.

 15 days free lock period from the date on which you receive the policy documents

Protection cum Savings Products:
Introduction
Sudarshan is an Endowment Policy designed to provide savings and protection to you
and your family. You can save regularly for the future. Thus at the end of the plan, you
will receive a substantial amount of savings along with the accumulated bonuses
declared. At the same time, your family will be protected for death risk for the full sum
assured.
Key features:
 It offers you the option of tailoring your policy according to your requirement and
needs, by opting for various extra covers (Riders) that are offered.

 This is a unique product that offers you an innovative cover (plan B) which helps
you to protect your savings against 'the financial consequences of inflation' with
constant premium for the entire duration of the plan.

 It gives you protection against unfortunate terminal or dreaded illness even your
own retirement - in a most flexible manner.



What is a Mutual Fund?

A vehicle for investing in stocks and bonds

A mutual fund is not an alternative investment option to stocks and bonds, rather it pools
the money of several investors and invests this in stocks, bonds, money market
instruments and other types of securities

Buying a mutual fund is like buying a small slice of a big pizza. The owner of a mutual
fund unit gets a proportional share of the fund’s gains, losses, income and expenses.

Each mutual fund has a specific stated objective

The fund’s objective is laid out in the fund's prospectus, which is the legal document that
contains information about the fund, its history, its officers and its performance.
Popular objectives of a Mutual Fund:

Fund objective
What the fund will invest in

Equity (Growth)
Only in stock.

Debt (Income)
Only in fixed income securities.

Money market (including Gilt)
In short-term money market
instruments (including
government securities)



Managed by an Asset Management Company (AMC)

The company that puts together a mutual fund is called an AMC. An AMC may have
several mutual fund schemes with similar or varied investment objectives.The AMC hires
a professional money manager, who buys and sells securities in line with the fund's stated
objective.

All AMCs Regulated by SEBI, Funds governed by Board of Directors

The Securities and Exchange Board of India (SEBI) mutual fund regulations require that
the fund’s objectives are clearly spelt out in the prospectus.In addition, every mutual fund
has a board of directors that is supposed to represent the shareholders' interests, rather
than the AMC’s.

Range of Services
 Investment banking
 Mutual Funds
 Brokerage and distribution of equities
 Dematerialization services
 Trading in commodities
 Life Insurance
 Features and Options
 Wealth management
 Corporate advisory

INTRODUCTION TO MUTUAL FUND

MEANING



A mutual fund is simply a financial intermediary that allows a group of investors to pool
their money together with a predetermined investment objective. The mutual fund will
have a fund manager who is responsible for investing the pooled money into specific
securities (usually stocks or bonds). When you invest in a mutual fund, you are buying
shares (or portions) of the mutual fund and become a shareholder of the fund.

Mutual funds are one of the best investments ever created because they are very cost
efficient and very easy to invest in (you don't have to figure out which stocks or bonds to
buy). By pooling money together in a mutual fund, investors can purchase stocks or
bonds with much lower trading costs than if they tried to do it on their own. But the
biggest advantage to mutual funds is diversification.

One can make money from a mutual fund in three ways:

A) Income is earned from dividends declared by mutual fund schemes from time to
time.

B) If the fund sells securities that have increased in price, the fund has a capital gain.
This is reflected in the price of each unit. When investors sell these units at prices
higher than their purchase price, they stand to make a gain.

C) If fund holdings increase in price but are not sold by the fund manager, the fund's
unit price increases. You can then sell your mutual fund units for a profit. This is
tantamount to a valuation gain.



HISTORY

The origin of mutual fund industry in India is with the introduction of the concept
of mutual fund by UTI in the year 1963. Though the growth was slow, but it accelerated
from the year 1987 when non-UTI players entered the industry

In the past decade, Indian mutual fund industry had seen a dramatic improvement,
both qualities wise as well as quantity wise. Before, the monopoly of the market had seen
an ending phase; the Assets Under Management (AUM) was Rs. 67bn. The private sector
entry to the fund family rose the AUM to Rs. 470 bn in March 1993 and till April 2004, it
reached the height of 1,540 bn.

Putting the AUM of the Indian Mutual Funds Industry into comparison, the total
of it is less than the deposits of SBI alone, constitute less than 11% of the total deposits
held by the Indian banking industry.

The main reason of its poor growth is that the mutual fund industry in India is
new in the country. Large sections of Indian investors are yet to be intellectuated with the
concept. Hence, it is the prime responsibility of all mutual fund companies, to market the
product correctly abreast of selling.

The mutual fund industry can be broadly put into four phases according to the
development of the sector. Each phase is briefly described as under:

First Phase - 1964-87

Unit Trust of India (UTI) was established on 1963 by an Act of Parliament. It was
set up by the Reserve Bank of India and functioned under the Regulatory and
administrative control of the Reserve Bank of India. In 1978 UTI was de-linked from the
RBI and the Industrial Development Bank of India (IDBI) took over the regulatory and
administrative control in place of RBI. The first scheme launched by UTI was Unit
Scheme 1964. At the end of 1988 UTI had Rs.6,700 crores of assets under management.

Second Phase - 1987-1993 (Entry of Public Sector Funds)


Entry of non-UTI mutual funds. SBI Mutual Fund was the first followed by
Canbank Mutual Fund (Dec 87), Punjab National Bank Mutual Fund (Aug 89), Indian
Bank Mutual Fund (Nov 89), Bank of India (Jun 90), Bank of Baroda Mutual Fund (Oct
92). LIC in 1989 and GIC in 1990. The end of 1993 marked Rs.47,004 as assets under
management.

Third Phase - 1993-2003 (Entry of Private Sector Funds)

With the entry of private sector funds in 1993, a new era started in the Indian
mutual fund industry, giving the Indian investors a wider choice of fund families. Also,
1993 was the year in which the first Mutual Fund Regulations came into being, under
which all mutual funds, except UTI were to be registered and governed. The erstwhile
Kothari Pioneer (now merged with Franklin Templeton) was the first private sector
mutual fund registered in July 1993.

The 1993 SEBI (Mutual Fund) Regulations were substituted by a more
comprehensive and revised Mutual Fund Regulations in 1996. The industry now
functions under the SEBI (Mutual Fund) Regulations 1996.

The number of mutual fund houses went on increasing, with many foreign mutual
funds setting up funds in India and also the industry has witnessed several mergers and
acquisitions. As at the end of January 2003, there were 33 mutual funds with total assets
of Rs.1,21,805 crores. The Unit Trust of India with Rs.44,541 crores of assets under
management was way ahead of other mutual funds.

Fourth Phase - since February 2003

This phase had bitter experience for UTI. It was bifurcated into two separate
entities. One is the Specified Undertaking of the Unit Trust of India with AUM of
Rs.29,835 crores (as on January 2003). The Specified Undertaking of Unit Trust of India,
functioning under an administrator and under the rules framed by Government of India
and does not come under the purview of the Mutual Fund Regulations.

The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and LIC.
It is registered with SEBI and functions under the Mutual Fund Regulations. With the



bifurcation of the erstwhile UTI which had in March 2000 more than Rs.76,000 crores of
AUM and with the setting up of a UTI Mutual Fund, conforming to the SEBI Mutual
Fund Regulations, and with recent mergers taking place among different private sector
funds, the mutual fund industry has entered its current phase of consolidation and growth.
As at the end of September, 2004, there were 29 funds, which manage assets of
Rs.153108 crores under 421 schemes.

THE MUTUAL FUND STRUCTURE
SEBI

TRUSTEE SPONSOR

OPERATIONS AMC

FUND MANGER

MKT/SALES MKT/ SALES

MUTUAL FUND

SCHEMES DISTRIBUTOR

The structure consists of INVESTOR

Sponsor - Sponsor is the person who acting alone or in combination with another body
corporate establishes a mutual fund. Sponsor must contribute at least 40% of the net
worth of the Investment Managed and meet the eligibility criteria prescribed under the
Securities and Exchange Board of India (Mutual Funds) Regulations, 1996.The Sponsor
is not responsible or liable for any loss or shortfall resulting from the operation of the
Schemes beyond the initial contribution made by it towards setting up of the Mutual
Fund.



Trust - The Mutual Fund is constituted as a trust in accordance with the provisions of the
Indian Trusts Act, 1882 by the Sponsor. The trust deed is registered under the Indian
Registration Act, 1908.

Trustee - Trustee is usually a company (corporate body) or a Board of Trustees (body of
individuals). The main responsibility of the Trustee is to safeguard the interest of the unit
holders and inter alia ensure that the AMC functions in the interest of investors and in
accordance with the Securities and Exchange Board of India (Mutual Funds) Regulations,
1996, the provisions of the Trust Deed and the Offer Documents of the respective
Schemes. At least 2/3rd directors of the Trustee are independent directors who are not
associated with the Sponsor in any manner.

Asset Management Company (AMC) - The AMC is appointed by the Trustee as the
Investment Manager of the Mutual Fund. The AMC is required to be approved by the
Securities and Exchange Board of India (SEBI) to act as an asset management company
of the Mutual Fund. At least 50% of the directors of the AMC are independent directors
who are not associated with the Sponsor in any manner. The AMC must have a net worth
of at least 10 crore at all times.

Registrar and Transfer Agent - The AMC if so authorized by the Trust Deed appoints
the Registrar and Transfer Agent to the Mutual Fund. The Registrar processes the
application form, redemption requests and dispatches account statements to the unit
holders. The Registrar and Transfer agent also handles communications with investors
and updates investor records.



Role of Mutual funds in Financial Market

Indian financial institution have played a dominant role in asset formation and
intermediation and contributed substantially in macroeconomic development. In this
process of development Indian Mutual Funds have emerged as a strong financial
intermediaries and are playing a very important role in bringing stability to the financial
system and efficiency to resource allocation.

Mutual Fund plays a crucial role in an economy by mobilizing savings and investing
them in the capital market, thus establishing a link between savings and the capital
market. The activities of mutual fund have both short and long term impact on the
savings and capital market, and the national economy. Mutual fund, thus, assist the
process financial intermediation. They mobilize funds in the saving market and act as
complimentary to banking, at the same time they also compete with banks and other
financial institutions. In the process stock market activities are also significant
influenced by mutual funds.

There is thus hardly any segment of the financial market, which is not influenced by
the existence and operations of mutual funds. However, the scope and efficiency of
mutual funds are influenced by overall economic fundamentals: the inter-relation
between the financial and real sector, the nature of development of the savings and
capital markets, market structure, institutional arrangements and overall policy regime.

ADVANTAGES OF INVESTING IN MUTUAL FUNDS



A. Professional Management - The primary advantage of funds is the professional
management of your money. Investors purchase funds because they do not have the
time or the expertise to manage their own portfolio. A mutual fund is a relatively
inexpensive way for a small investor to get a full-time manager to make and monitor
investments.
B. Diversification - By owning shares in a mutual fund instead of owning individual
stocks or bonds, the risk is spread out. The idea behind diversification is to invest in a
large number of assets so that a loss in any particular investment is minimized by
gains in others. In other words, the more stocks and bonds you own, the less any one
of them can hurt you. Large mutual funds typically own hundreds of different stocks
in many different industries. It wouldn't be possible for an investor to build this kind
of a portfolio with a small amount of money.
C. Economies of Scale - Because a mutual fund buys and sells large amounts of
securities at a time, its transaction costs are lower than you as an individual would
pay.
D. Liquidity - Open-ended mutual funds are priced daily and are always willing to buy
back units from investors. This means that investors can sell their holdings in mutual
fund investments anytime without worrying about finding a buyer at the right price.
In the case of other investment avenues such as stocks and bonds, buyers are not
necessarily available and therefore these investment avenues are less liquid compared
to open-ended schemes of mutual funds.
E. Regulations - All Mutual Funds are registered with SEBI and they function under
strict guidelines designed to protect the interests of the Investor.
F. Tax benefits
 Equity Funds:
Currently, dividends are tax-free in the hands of the investor. There is no
distribution tax payable by the Mutual Fund on dividends distributed. There is
no tax deduction at source on dividends as well. Investments for over 12
months qualify for long term capital gains. Moreover for resident investors
there is no TDS on redemption of the units. The recently introduced Securities
Transaction Tax is applicable to equity fund investments.



 Debt Funds:

Currently, dividends are tax-free in the hands of the investor. However, there
is distribution tax together with surcharge and education cess, as may be
applicable, payable by the Mutual Fund on dividends distributed. There is no
tax deduction at source on dividends as well. Investments for over 12 months
qualify for long term capital gains. For resident investors there is no TDS on
redemption of the units.

LIMITATIONS OF MUTUAL FUNDS

As Mutual Fund provides numerous advantages for investment it has also few
limitations that are listed below:

A) Costs Despite Negative Returns- Investors must pay sales charges, annual fees,
and other expenses regardless of how the fund performs. And, depending on the
timing of their investment, investors may also have to pay taxes on any capital
gains distribution they receive – even if the funds went on to perform poorly after
they bought shares.

B) Lack of Control- Investors typically can’t ascertain the exact make up of a fund’s
portfolio at any given time, nor can they directly influence which securities the
fund manager buys and sells or the timing of those trades.

C) Price Uncertainty- With an individual stock, you can obtain real time pricing
information with relative ease by checking financial websites or by calling your
broker. You can also monitor how a stocks price changes from hour to hour or
even seconds to seconds. By contrast, with a Mutual Fund, the price at which you
purchase or redeem shares will typically depend on the funds NAV. In general;
Mutual Funds must calculate their NAV at least once every business day,
typically after the major U.S. exchange close.

GLOBAL SCENARIO



Some basic facts-

 The money market mutual fund segment has a total corpus of $ 1.48 trillion in the
U.S. against a corpus of $ 100 million in India.
 Out of the top 10 mutual funds worldwide, eight are bank- sponsored. Only
Fidelity and Capital are non-bank mutual funds in this group.
 In the U.S. the total number of schemes is higher than that of the listed companies
while in India we have just 277 schemes
 Internationally, mutual funds are allowed to go short. In India fund managers do
not have such leeway.
 On- line trading is a great idea to reduce management expenses from the current
2 % of total assets to about 0.75 % of the total assets.

Changes Taken Place
 Lower Costs: As per SEBI regulations, bond funds can charge a maximum of
2.25% and equity funds can charge 2.5% as administrative fees. Therefore if the
administrative costs are low, the benefits are passed down and hence Mutual
Funds are able to attract mire investors and increase their asset base.
 Better Advice: Mutual funds could provide better advice to their investors
through the Net rather than through the traditional investment routes. Direct
dealing with the fund could help the investor with their financial planning.
 New investors would prefer online: Mutual funds can target investors who are
young individuals and who are Net savvy, since servicing them would be easier
on the Net.



FUTURE SCENARIO

The asset base will continue to grow at an annual rate of about 30 to 35 % over the next
few years as investor’s shift their assets from banks and other traditional avenues. Some
of the older public and private sector players will either close shop or be taken over.

Out of ten public sector players five will sell out, close down or merge with stronger
players in three to four years. In the private sector this trend has already started with two
mergers and one takeover. Here too some of them will down their shutters in the near
future to come.

But this does not mean there is no room for other players. The market will witness a
flurry of new players entering the arena. There will be a large number of offers from
various asset management companies in the time to come. Some big names like Fidelity,
Principal, Old Mutual etc. are looking at Indian market seriously. One important reason
for it is that most major players already have presence here and hence these big names
would hardly like to get left behind.

The mutual fund industry is awaiting the introduction of derivatives in India as this would
enable it to hedge its risk and this in turn would be reflected in its Net Asset Value
(NAV).

SEBI is working out the norms for enabling the existing mutual fund schemes to trade in
derivatives. Importantly, many market players have called on the Regulator to initiate the
process immediately, so that the mutual funds can implement the changes that are
required to trade in Derivatives.



TYPES OF SCHEMES

A. Investment Objective:

Schemes can be classified by way of their stated investment objective such as Growth
Fund, Balanced Fund, and Income Fund etc.

1. Equity Oriented Schemes

The investments of these schemes will predominantly be in the stock markets
and endeavor will be to provide investors the opportunity to benefit from the higher
returns which stock markets can provide. However they are also exposed to the
volatility and attendant risks of stock markets and hence should be chosen only by
such investors who have high risk taking capacities and are willing to think long term.
Equity Funds include diversified Equity Funds, Sectoral Funds and Index Funds.
Diversified Equity Funds invest in various stocks across different sectors while
sectoral funds which are specialized Equity Funds restrict their investments only to
shares of a particular sector and hence, are riskier than Diversified Equity Funds.
Index Funds invest passively only in the stocks of a particular index and the
performance of such funds move with the movements of the index.



 Magnum COMMA Fund

 Magnum Equity Fund

 Magnum Global Fund

 Magnum Index Fund

 Magnum MidCap Fund

 Magnum Multicap Fund

 Magnum Multiplier Plus 1993

 Magnum Sector Funds Umbrella

o MSFU - FMCG Fund

o MSFU - Emerging Businesses Fund

o MSFU - IT Fund

o MSFU - Pharma Fund

o MSFU - Contra Fund

 SBI Arbitrage Opportunities Fund

 SBI Blue chip Fund

 SBI Infrastructure Fund - Series I

 SBI Magnum Taxgain Scheme 1993

 SBI ONE India Fund

 SBI TAX ADVANTAGE FUND - SERIES I



2. Debt Based Schemes

Debt Funds invest only in debt instruments such as Corporate Bonds, Government
Securities and Money Market instruments either completely avoiding any investments
in the stock markets as in Income funds or gilt Funds or having a small exposure to
equities as in Monthly Income Plans or Children's Plan. Hence they are safer than
equity funds. At the same time the expected returns from debt funds would be lower.
Such investments are advisable for the risk.

 Magnum Children`s Benefit Plan

 Magnum Gilt Fund

o Magnum Gilt Fund (Long Term)

o Magnum Gilt Fund (Short Term)

 Magnum Income Fund

 Magnum Income Plus Fund

o Magnum Income Plus Fund (Saving Plan)

o Magnum Income Plus Fund (Investment Plan)

 Magnum Insta Cash Fund

 Magnum InstaCash Fund -Liquid Floater Plan

 Magnum Institutional Income Fund

 Magnum Monthly Income Plan

 Magnum Monthly Income Plan Floater

 Magnum NRI Investment Fund



 SBI Capital Protection Oriented Fund - Series I

 SBI Debt Fund Series

o SDFS 15 Months Fund

o SDFS 90 Days Fund




o SDFS 60 Days Fund

o SDFS 180 Days Fund

 SBI Premier Liquid Fund

 SBI Short Horizon Fund

o SBI Short Horizon Fund - Liquid Plus Fund

o SBI Short Horizon Fund - Short Term Fund

3. Hybrid Schemes (Balanced scheme)

Magnum Balanced Fund invest in a mix of equity and debt investments.
Hence they are less risky than equity funds, but at the same time provide
commensurately lower returns. They provide a good investment opportunity to
investors who do not wish to be completely exposed to equity markets, but is
looking for higher returns than those provided by debt funds.

 Magnum Balanced Fund

 Magnum NRI Investment Fund - FlexiAsset Pl



B. STRUCTURE

Schemes can be classified as Closed-ended or Open-ended depending upon
whether they give the investor the option to redeem at any time (open-ended) or whether
the investor has to wait till maturity of the scheme.

1. Open ended Schemes - The units offered by these schemes are available for sale
and repurchase on any business day at NAV based prices. Hence, the unit capital
of the schemes keeps changing each day. Such schemes thus offer very high
liquidity to investors and are becoming increasingly popular in India. Please note
that an open-ended fund is NOT obliged to keep selling/issuing new units at all
times, and may stop issuing further subscription to new investors. On the other
hand, an open-ended fund rarely denies to its investor the facility to redeem
existing units.

2. Closed ended Schemes - The unit capital of a close-ended product is fixed as it
makes a one-time sale of fixed number of units. These schemes are launched with
an initial public offer (IPO) with a stated maturity period after which the units are
fully redeemed at NAV linked prices. In the interim, investors can buy or sell
units on the stock exchanges where they are listed. Unlike open-ended schemes,
the unit capital in closed-ended schemes usually remains unchanged. After an
initial closed period, the scheme may offer direct repurchase facility to the
investors. Closed-ended schemes are usually more illiquid as compared to open-
ended schemes and hence trade at a discount to the NAV. This discount tends
towards the NAV closer to the maturity date of the scheme.

3. Interval Schemes - These schemes combine the features of open-ended and
closed-ended schemes. They may be traded on the stock exchange or may be open
for sale or redemption during pre-determined intervals at NAV based prices.

Rules prescribed to govern Mutual Funds:

1. All Mutual Funds expect the statutory ones, will have to seek the approval of the
SEBI and the scheme floated by them shall have to be registered with the SEBI.


2. Mutual Funds shall be established in the form of trust under Indian Trust Act to
be operated by separate asset management companies (AMCs) will be authorized
by SEBI and should have minimum net worth of 5 crores.
3. SEBI will have the power to withdraw authorization to any AMC if it finds the
interest of investors, Mutual Funds or the capital market are not been served.
4. The AMC and the Trustee of a Mutual Fund should be two separate legal entities
and an AMC or its affiliate cannot act as a manager or any other fund.
5. No person should be director of more than one AMC, nor hold the position of the
trustee of director in trust company of funds operated by the same AMC.
6. Mutual Funds must distribute 90% of their profits in any given year.
7. No Mutual Funds under all its schemes shall hold more than 10% of its fund in
the shares or debentures or other instruments of a single company.
8. No Mutual Funds under all its schemes take together shall invest more than 10%
of its fund in the shares or debentures or other instruments of a single company.
9. No Mutual Funds under all its schemes taken together shall invest more than 15%
of its fund in the shares and debentures of any specific industry, expecting those
schemes which have been floated specifically for investment in one or more
specified industries and a declaration has been made in the offer letter.
10. No individual scheme of Mutual Funds shall invest more than 5% of its corpus in
any one company’s share.
11. Mutual Funds can invest only in transferable securities either in the money market
or in the capital market.
12. Privately placed debentures, securities debt and other unquoted debt instrument
holding shall not exceed 10% in case of growth fund and 40% in case of income
funds.
13. Mutual Funds will be required to take delivery of scrip purchase and give delivery
in case of income funds.
14. Mutual Funds shall be authorized for business by SEBI and registered companies
with sound track records and good reputation could sponsor this.
15. The entire subscription shall have to be refunded to the investor if (a) The
minimum amount of Rs.20 Crores or 60% of the targeted amount which ever is



higher is not raised for closed-end scheme or (b) The minimum amount of Rs.50
Crores or 60% of the targeted amount, whichever is higher is not raised for an
open-ended scheme.
16. Mutual Funds shall provide continuous liquidity and closed-end scheme shall be
listed on exchange. For open ended schemes, Mutual Funds shall sell or purchase
units at predetermined price based on net asset value, which shall be published at
least ones a week .

NAV OF A MUTUAL FUND

Track your investments:
One easy way to keep track of your fund is to keep track of the intelligent investor
rankings of mutual funds, which are complied on a quarterly basis. These rankings allow
you to take note of your funds performance and risk profile and compare it across various
time periods as well as across its peer set,
Net Asset Value (NAV)
The net asset value of the fund is the cumulative market value of the assets fund net of its
liabilities. In other words, if the fund is dissolved or liquidated, by selling off all the
assets in the fund, this is the amount that the shareholders would collectively own. This
gives rise to the concept of net asset value per unit, which is the value, represented by the
ownership of one unit in the fund. It is calculated simply by dividing the net asset value
of the fund by the number of units.

Calculation of NAV
The most important part of the calculation is the valuation of the assets owned by the
fund. Once it is calculated, the NAV is simply the net value of assets divided by the
number of units outstanding. The detailed methodology for the calculation of the asset
value is given below:
Asset value is equal to:
Sum of market value of shares/debentures
 Liquid assets/cash held, if any
 Dividends/interest accrued



 Amount due on unpaid assets
 Expenses accrued but not paid
Details on the above items
For liquid shares/debentures, valuation is done on the basis of the last or closing market
price on the principal exchange where the security is traded
For illiquid and unlisted and/or thinly traded shares/debentures, the value has to be
estimated. For shares, this could be the book value per share or an estimated market price
if suitable benchmarks are available. For debentures and bonds, value is estimated on the
basis of yields of comparable liquid securities after adjusting for illiquidity. The value of
fixed interest bearing securities moves in a direction opposite to interest rate changes
Valuation of debentures and bonds is a big problem since most of them are unlisted and
thinly traded. This gives considerable leeway to the AMCs on valuation and some of the
AMCs are believed to take advantage of this and adopt flexible valuation policies
depending on the situation.
Interest is payable on debentures/bonds on a periodic basis say every 6 months. But, with
every passing day, interest is said to be accrued, at the daily interest rate, which is
calculated by dividing the periodic interest payment with the number of days in each
period. Thus, accrued interest on a particular day is equal to the daily interest rate
multiplied by the number of days since the last interest payment date. Usually, dividends
are proposed at the time of the Annual General meeting and become due on the record
date.

How is the percentage change in NAV calculated?
Percentage change in NAV is an absolute measure of return, which finds the NAV
appreciation between two points, as a percentage. For example, if the NAV of the fund is
Rs.23.45 at the beginning of a year, and Rs. 27.65 at the end of the year, then the
percentage change in NAV is
= ( 27.65-23.45 ) / 23.45*100
= 17.91%
The general formula is (Absolute change in NAV / NAV at the beginning)* 100



What is the rate of return to an investor in mutual funds?
An investor in mutual fund earns returns from 2 sources:
 Income from Dividend paid by the mutual fund.
 Capital gains arising out of selling the units at a price higher than the acquisition
price.

What is Growth Option?
Investors who do not require periodic income distributions can choose the growth option,
where incomes earned are retained in the investment portfolio, and allowed to grow,
rather than being distributed to the investors.

What is Dividend Option?
Investors, who choose a dividend option on their investment, will receive dividends from
the mutual fund, as and when such dividends are declared. Dividend are paid in the form
of warrants, or directly credited to the investor bank accounts.
There are further choices in the distribution of dividends, in the normal dividend plan,
periodicity of dividend is left to Fund Manager, who may pay annually or an interim
dividend. There are other choices where in the investor can choose their dividend payout
frequencies that can monthly, weekly, daily.

What is re-investment option?
Mutual Funds also provide another option to investors in the form of re-investment.
Investors reinvest the dividends that are declared by the mutual fund, back into the fund
itself, at NAV that is prevalent at the time of re-investment. In this option, the number of
units held by the investor will change with every re-investment. The value of the units
will be similar to that under the dividend option.

What are 1) Equity funds 2) Debt funds 3) Sector funds?



Equity Funds: These are those that invest pre-dominantly in equity shares of the
companies.
Debt Funds: These are those that pre-dominantly invest in debt securities such as bonds,
commercial papers, certificates of deposits and treasury bills.
Sector Funds: Sector funds choose to invest in one or more chosen sectors of the equity
markets. These sectors could vary depending on the investors preference than the return
risk attributes of the sector.

What is the maximum load the fund can charge?
A mutual fund is required to dispatch to the unitholders the dividend warrants within 30
days of the declaration of the dividend and the redemption or repurchase proceeds within
10 working days from the date of redemption or repurchase request made by the
unitholder.
In case of failures to dispatch the redemption/repurchase proceeds within the stipulated
time period, Asset management Company is liable to pay interest as specified from time
to time 915% at present).



ANALYSIS AND FINDINGS

Analysis of Questionnaire
RESPONDENTS AGE

age

Cumulative
Frequency Percent Valid Percent Percent
Valid 18-30 32 32.0 32.0 32.0
30-40 26 26.0 26.0 58.0
40-50 21 21.0 21.0 79.0
50&above 21 21.0 21.0 100.0
Total 100 100.0 100.0



age

50&above
21.0%
18-30

32.0%

40-50
21.0%

30-40

26.0%

Interpretation:
Out of 100 respondents 32% are 18 to 30 age, 26% are 30 to 40, 21% are 40 to 50 and
remaining 21% are of above 50. So Mutual funds should more concentrate on young
generation because they have less risk on family and they will investment more because
of career development and retirement benefits.



OCCUPATION OF THE RESPONDENTS

what is your occupation

Cumulative
Valid serviceman 19 19.0 19.0 19.0
businessman 39 39.0 39.0 58.0
professional 19 19.0 19.0 77.0
other 23 23.0 23.0 100.0
Total 100 100.0 100.0

what is your occupation

serviceman
other
19.0%
23.0%

professional

19.0%
businessman
39.0%

Interpretation:

The responses which I had got 19% were serviceman, 39% were businessman,
19% were professional and the remaining 23% were other people.



MONTHLY INCOME:
what is your monthly income in rupess

Cumulative
Valid below 5000 8 8.0 8.0 8.0
5000-10000 18 18.0 18.0 26.0
10000-15000 17 17.0 17.0 43.0
15000-20000 27 27.0 27.0 70.0
20000-25000 15 15.0 15.0 85.0
above 25000 15 15.0 15.0 100.0
Total 100 100.0 100.0

what is your monthly income in rupess

below 5000
above 25000
8.0%
15.0%

5000-10000

18.0%
20000-25000

15.0%

10000-15000

17.0%
15000-20000

27.0%

Interpretation:
Out of 100 samples 8% are of below Rs.5,000, 18% are of above 5,000 and below
Rs.10,000, 17% are of above Rs.10,000 and below Rs.15,000,27% are of above 15,000
and below Rs 20,000, 15% are of above 20,000 and below 25,000 the remaining 15% are
of above Rs.25,000 monthly income.



AWARENESS

are you aware about of sbi mutual fund

Cumulative
Valid yes 66 66.0 66.0 66.0
no 34 34.0 34.0 100.0
Total 100 100.0 100.0

are you aware about of sbi mutual fund
no

34.0%

yes
66.0%

Interpretation:
Out of 100 samples 66% are aware of SBI mutual funds i.e. 66 surveyed people
know about SBI mutual funds and 34% are unaware of the SBI mutual funds. As there is
a lack of awareness in this semi urban city Belgaum, the attempts should be made to
create the general awareness through popular modes of communication that would reach
the potential customers, like Local T.V Channels, Local Newspapers, Theatres,
Hoardings and Banners in the public crowded areas.

MUTUAL FUND:



do you want to invest your money in the following mutual fund

Cumulative
Valid debt fund 35 35.0 35.0 35.0
equity fund 40 40.0 40.0 75.0
no 25 25.0 25.0 100.0
Total 100 100.0 100.0

do you want to invest your money in the following mutual fund
no

25.0%
debt fund

35.0%

equity fund

40.0%

Interpretation:
Out of 100 samples 40% respondents have invested their money in equity mutual funds
and the remaining 35%have invested in debt mutual funds and remaining 25% respondents
are not interested.

INVESTED IN MUTUAL FUND:



have you invested money in mutual fund

Cumulative
Valid yes 65 65.0 65.0 65.0
no 35 35.0 35.0 100.0
Total 100 100.0 100.0

have you invested money in mutual fund
no

35.0%

yes

65.0%

Interpretation:
Out of 100 samples 65% respondents have invested their money in mutual funds and
the remaining 35% have not invested in mutual funds. So that the potential market
available for targeting is around 35%.



INVESTMENT COMPANIES:

in which company you have invested your money

Cumulative
Valid uti 36 36.0 36.0 36.0
sbi 33 33.0 33.0 69.0
reliance money 20 20.0 20.0 89.0
others 11 11.0 11.0 100.0
Total 100 100.0 100.0

in which company you have invested your money

others

11.0%

uti
reliance money 36.0%
20.0%

sbi

33.0%

Interpretation:
Out of 100 samples 36% respondents have invested their money in UTI mutual funds,
33% respondents have invested their money in SBI mutual fund, 20% respondents have
invested their money in reliance money and the remaining 11% respondents have
invested their money in other mutual fund.



PLANS:

which plan you have taken

Cumulative
Valid debt fund 35 35.0 35.0 35.0
equity fund 40 40.0 40.0 75.0
if any other specify others 25 25.0 25.0 100.0
Total 100 100.0 100.0

which plan you have taken
if any other specify

25.0%
debt fund

35.0%

equity fund

40.0%

Interpretation:
Out of 100 samples 40% respondents have invested their money in equity scheme
mutual funds, 35% respondents have invested their money in debt scheme mutual fund
and the remaining 25% respondents have invested their money in other scheme



INVESTED IN MUTUAL FUND:
which amount you are contributing to a mutual fund

Cumulative
Valid up to 10000 31 31.0 31.0 31.0
10000-25000 41 41.0 41.0 72.0
25000-50000 22 22.0 22.0 94.0
50000-100000 6 6.0 6.0 100.0
Total 100 100.0 100.0

which amount you are contributing to a mutual fund

50000-100000

6.0%

up to 10000
25000-50000
31.0%
22.0%

10000-25000

41.0%

Interpretation:
Out of 100 respondents 31% of them have invested up to Rs.10,000, 41% of them have
invested above Rs 10,000 and below Rs 25,000, 22% of them have invested above Rs
25,000 and below Rs 50,000, and remaining 6% of them have invested above Rs.50,000
and below Rs 1,00,000. Mutual fund companies should give advertisement on T.V and
other local medium to attract the customers.



INFLUENCED TO BUY MUTUAL FUND:

what influenced your financial planning

Cumulative
Valid discussion with
21 21.0 21.0 21.0
family member
stock holder/agent 45 45.0 45.0 66.0
website 34 34.0 34.0 100.0
Total 100 100.0 100.0

what influenced your financial planning
w ebsite

34.0%

discussion w ith fami

21.0%

stock holder/agent

45.0%

Interpretation:
According to respondents the influencing factor to buy mutual funds was 21% of them
were influenced by Family member,45% were influenced by stock holder/agent,34% of
them influenced by website. People who have invested in mutual funds they have
influenced from family member, stock holder/agent, website.



INFLUENCED TO WHILE TAKING DECISION TO INVEST IN MUTUAL
FUND:

which factor you considered while taking decision to invest in mutual fund

Cumulative
Valid returns 36 36.0 36.0 36.0
saving 20 20.0 20.0 56.0
liquidity 16 16.0 16.0 72.0
if any other specify 28 28.0 28.0 100.0
Total 100 100.0 100.0

which factor you considered while taking decision to invest in mutual fu

if any other specify

28.0%
returns

36.0%

liquidity

16.0%

saving

20.0%

Interpretation:
The various attributes the investors look for while buying the mutual funds are 36% of
them gives preference of Rate of Return, 20% of them gives preference of saving, 16% of
them gives preference of liquidity, 28% of them gives preference of other (tax benefit)
People will consider rate of return as a very high attribute while investing in mutual funds
compared to other attributes like saving, liquidity, and other.



FUTURE INVESTED IN SBI MUTUAL FUND:

in future are you interested investing money in SBI mutual fund

Cumulative
Valid yes 64 64.0 64.0 64.0
no 36 36.0 36.0 100.0
Total 100 100.0 100.0

in future are you interested investing money in SBI mutual fund
no

36.0%

yes

64.0%

Interpretation:
Out of 100 samples 64% respondents will invested their money in SBI mutual fund,
and remaining 36% respondents will not invested their money in SBI mutual fund.



if no why

Cumulative
Valid risk 28 28.0 28.0 28.0
not much knowledge
18 18.0 18.0 46.0
about the mutual fund
bad experience 10 10.0 10.0 56.0
returns is not fixed 23 23.0 23.0 79.0
all of the above 21 21.0 21.0 100.0
Total 100 100.0 100.0

if no why

all of the above

21.0% risk

28.0%

returns is not fixed

23.0% not much know ledge a

18.0%
bad experience

10.0%

Interpretation:
The reason for not opting for mutual funds for those 28% respondents they feel mutual
fund involves high risk, 18% respondents not much knowledge about mutual fund, 10%
respondents had bad experience with mutual funds because they have lost their money in
past, 23% respondents they feel mutual fund return is not fixed, 21% respondents all of
the above reason.



FINDINGS

Thus on the basis of the study conducted we can see that Mutual Fund is one of the best
options for investment as it has many advantages of diversification, professional
management, economies of scale, liquidity etc. From the survey conducted it was found
that –

 Mutual fund should mainly concentrate on young generation.

 Around 66% aware about SBI mutual fund.

 Investors invest in Mutual Funds as a high return and (saving) security in their old
age or as retirement security. While others invest to gain access to stock market
through professional management and for higher education.

 Around 30% of the investors know about the tax benefits of investing in Mutual
Funds.



SUGGESTIONS

• Awareness of mutual funds:

Investors are not very much aware of the investment opportunities, therefore they
have to be educated about this form of investment. In order to educate the
Government as well as the Non-government employees, seminars and workshops
could be conducted in these organizations and try to clear their doubts and
misconceptions about Mutual funds.

• Proper benchmark is required to measure the performance of the mutual funds.
• Mutual fund is a classical example of unsought goods. The nature of that the
consumer does not know about or does not normally think of buying. The
attempts should be made to create awareness through popular modes of
communication that would reach the potential customers, like Local T.V
Channels, Local Newspapers, Theatres, Hoardings and Banners in the public
crowded areas etc.



CONCLUSION

From the above study it is seen that there is an attractive market for mutual funds in
Belgaum provided awareness should be created of the different schemes and people
should be educated with all the information of mutual funds.



References

 Company website

 Magazines

 www.moneycontrol.com

 www.mutualfundsindia.com

 www.amfi.com



Annexure
QUESTIONARRIE

1. Age
a] 18-30 ` b] 30-40 c] 40-50

d] 50 & above

2. What is your occupation?
Serviceman Businessman
Professional Other

3. What is your monthly income in Rupess?
Below 5,000 5,000-10,000
10,000-15,000 15,000-20,000
20,000-25,000 above 25,000

4. Are you aware about SBI Mutual fund?
Yes No

5. Do you want to invest your money in the following Mutual fund?
Debt fund Equity fund No

6. Have you invested money in Mutual fund?
Yes No
th
(If no go to 12 question)

7. In which company have you have invested your money?
UTI SBI
Reliance money Other

8. Which plan you have taken?
Debt fund Equity fund
If any other specify other ……………



9. Which amount you are contributing to a Mutual fund?

Up to 10,000 10,000-25,000
25,000-50,000 50,000-1, 00,000

10. What influenced your financial Planning?
Discussion with family Member
Stock holder/ Agent
Web site

11. Which factor you considered while taking decision to invest Mutual
Fund?
Returns Saving
Liquidity If any other specify…………….

12In futures are you invested money in SBI Mutual fund?
Yes No

13. If no why?
1. Risk
2. Not much knowledge about the Mutual fund
3. Bad experience
4. Returns is not fixed
5. All of the above

Signature of the person

Thank You for Your Kind Cooperation


Customer awareness @ sbi mutual fund project report mba marketing

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